Supply Includes Without Consideration - Para 2 of Schedule I Read with Section 7(1)(c) - GST Ready Reckoner - GST

Supply Without Consideration shall be considered as Supply - Schedule I - As per section 7(1)(c) , the activities specified in Schedule I, made or agreed to be made without a consideration shall be considered as supply. Accordingly, Schedule I to the CGST Act contain the certain activities or transaction specified in, made or agreed to be made without a consideration, have also been include in the definition of Supply . Para 2 . Supply of goods or services or both between related persons or distinct persons as specified in section 25, when made in the course of furtherance of business. Supply of goods or services or both between related person when made in the course of furtherance of business will be subject to GST, even if there is no consideration. Supply of goods or services or both between distinct persons when made in the course of furtherance of business will be subject to GST, even if there is no consideration. Inter- state stock transfer or branch will be subject to GST, even intra- state stock transfer or branch transfer will be subject to GST if there are separate GST registration. Supply of services by HO or one branch /division to another will be subject to GST if there are separate registrations. Leasing equipment to own branch having different GST registration will be subject to GST. Services supplied by establishment of person in India to own establishment out of India is exempt, if place of supply is out of India. Services supplied by an establishment of a person in India to any establishment of that person outside India, which are treated as establishments of distinct persons is exempt, if the place of supply of the service is outside India in accordance with section 13 of IGST Act, 2017. Maintaining liaison office/branch office in India is not supply of service. Inter-state supply of craft engines, parts and accessories by airlines to own branch in another state will be subject to IGST. Service supplied by branch to HO/branch out of India not taxable, even if it is not export. Case Law 1. M/s . Profisolutions Pvt. Ltd. ( 2023 (4) TMI 541 - AAR, Tamilnadu ) - HELD THAT :- Services, including the services of common employees of a person, provided by branch office to head office and vice versa, each having separate GST registration, will attract GST liability under respective Acts, viz IGST Act, 2017 or CGST Act, 2017 and SGST Act, 2017 or UTGST Act, 2017. GST on Gift / fringe benefits / perquisites to employees Employer and employee have been defined as related person [ Explanation (a) of Section 15 ] . The gifts (Exclude the Perquisites , Fringe benefits ) not exceeding 50,000/- rupees in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both. The gifts given by employers to employees are liable to GST if the value of the gift exceeds Rs. 50,000. It may noted that when goods are disposed of by way of gift, however, reversal of input credit will required as per u/s 17(5) . The employer is required to track the supply without consideration for each employee since the limit is for an employee during the financial year. However, if any amount recovered from the employee, it will be subject to GST and value will be determined as per section 15 of CGST Act. Example , a computer of INR 1,00,000/- is given to the employee for INR 20,000/-, then value of supply shall be INR 1,00,000/- (i.e. INR 80,000/- without consideration and INR 20,000/- as money consideration) determined as per valuation rules described the CGST Act. Meaning of Gift is transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person called doner to another called donee and accepted by or on behalf of the done section 122 of transfer of property Act, 1882. It is a common practice among certain sections of trade and industry, such as, pharmaceutical companies which often provide drug samples to their stockists, dealers, medical practitioners, etc. without charging any consideration. It is clarified in Circular No. 92/11/2019-GST Dated 07th March, 2019, Free samples and gifts to unrelated person will not be subject to GST but input tax credit will have to be reversed. to related person will be subject to be GST and ITC will be available. Free/subsidised transport to employees:- If free transport, free car or free telephones (for personal use) is supplied as perquisite, GST will be payable on basis of Open Market Value. Cross - Charge of Service Cross-charge is nothing but a Supply between - Two or more Offices/establishment of a company or related companies enjoying common facilities It may also be termed as a mechanism to allocate the value, as per the valuation rules and charge GST form distinct/related person. Nevertheless, when it falls within the scope of the term supply , it is mandatory to cross-charges. Example - ABC Co. is registered in Delhi as well as Gurugram. Establishment in Delhi and Gurugram shall be treated as establishments of distinct person. Suppose, Delhi office transfer 5 member of staff to Gurgram office for some internal work for 10 days, it will considered as supply of manpower services from Delhi office to Gurugram Office.